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FILE NOTE TO BE SEEN BY DR. BLACK}tAN Summary of discussions with George Tuylor of llercules on the 5th May. George Taylor obviously had three objectives: a) To get BAT on the hook for as much corr~nitment as possible by involvement in as large a plant as possible in Oxford, Georgia. b) flare this involvement as part of the world-wide joint venture, thus legally tying in BAT's ~now-how. c) Moving the pro.leer on as quickly as possible. a) Desp[te TayIor's insistence that a 2,000 ton plant was a minimum, bearing in mind the lead times, he reluctantly accepted a smaller plant if, as was the ~AT Board"s wish, a major effort would be made in Brazil. As usual his tactic was of playing one part of BAT off against another. He thus went away to get the first engineering consideration of a 1,000 ton plant. b) Although still wishing to have the first plant as part of the joint venture, Taylor accepted that it could come under an extension of the current Letter of Intent. He said he would send a revised draft Letter of Intent but as this has not appeared at the time of writing and his ~egal peop|e in telephune conversations with Mr. Morini hs~e not indicated this to be on their priority list, he is no doubt going to try again to have it as part of the main venture. We should resist this, particularly as we might want this part to be undertaken by B&W and also because the main venture should, if possible, be a 'stand alone' arrangement and not mar~in~l c) lie took Mr. Morini's card with a view to arranging the first high level discussion on the joint venture and already bit. blorini has received a request [or a meeting. He countered this hy asking a major strategy meeCin~ here and with [mlustries be[ore we are £a any position ~o tatk. O~herwise the Taylor tactic of playing one off against another will cause [utur~ problems us one part of the BAT organisation gets ahead of others. One point of interest was his assumption ow,r dinner that the pricing policy of th~ j,~int venture would b,: standard, rc~ardtess of customer (c.f. Pilkington's experience). This might n,~t fit in with BAT's best interests. Undoubtedly, george Taylor will come back for more, although he [s beginning to see the writing on the wall. We must be organised to match his input, at all times stressing that in this instance, unlike Polo, we have at least as much if not more know-how than Herc,tes. BATCo document for Mayo Clinic 20 June 2002

- 2 2. We should have a code name for this project as the word Hercules is being bandied about freely. Convc~sati,~us with Edm,od Knight on tart[Is brought D,,nmark intt~ focus. It h~s ~he advantage o£ them being highly commercial and in a monopoly situation in a high class market in the EEC. A disadvantage could be that ~hey are not a subsidiary and might well try to grasp the opportunity themselves. I feel a top level discussion (by say Mr. Stewart Lockhart?) with the company could lead to valuable market research of the product albeit at a small level (the market is 600 million per month). 4. Vis-a-vis the Board, we are not asking for a lot of money when "parallel communications" was due to spend £1.4 million, break-oven cunmlat{vely after three years with comparatlvely little profit potential. Can we get s~me formal presentation to the production meeting in early June? The production people are crqcial to making the tow r,n properly and often also getting it imported at beneficial rates. Alan Eastwood is all for this (and [ have subsequently talked with John Butcher). Have had a meeting with Stewart and Luke to try to tie up Swi[ts more formally than the curr~mt gentleman's agreement. John L~,ke is diggi~g out any relevant exchaa~c of correspomh, nce that Also note that Brazil have made inquiries about a special adheslue Plastiflex A402 - (which they described as a plasticiser) - to be sent from a UK supplier. Are they trying to get round the use of our patented adhesive? Could be counter productive for the Group. lSth May 198[ BATCo document for Mayo Clinic 20 June 2002